The American division of L’Occitane International SA, a French maker of beauty products, has filed for bankruptcy due to $15 million in unpaid rent and “burdensome” lease obligations where sales have fallen due to the pandemic.
L’Occitane has stores in more than 90 countries. Its US division employs more than 1,000 people, operates 166 stores in 36 states and Puerto Rico, and generated 14.8% of the company’s net sales in its latest quarter ending on Dec. 31. The pandemic made consumers less willing to shop in person, hurting sales at more than two dozen stores, according to Yann Tanini, L’Occitane’s regional managing director, in a chapter 11 petition, according to the Wall Street Journal. While the company’s e-commerce sales grew 72% during the nine months ending on Dec. 31, sales overall fell 8.9% for the same period, and sales for its existing retail locations in the US fell 16%.
L’Occitane’s bankruptcy filing follows wider trends in retail, even with the growth in sales of self-care items and beauty products during the pandemic. At least 29 retailers in the US filed for bankruptcy in 2020, some of them for the second time, causing commercial real estate to suffer a domino effect from unpaid rents and store closures. Sales at L’Occitane’s retail locations in the US had already experienced a 3% decline in the last nine months of 2019 prior to the pandemic, but temporary closures, reduced hours, and capacity limitations last year only made things worse. The US division’s leases total approximately $30 million each year, according to the Wall Street Journal.
Even with these results, L’Occitane remains attractive to investors. Shares of the international parent company have risen 16% on the Hong Kong Stock Exchange in the last year.